Incentive = Less Consumptive?

March 20, 2008

Indonesians are consumptive. One of the aspects that show the excessiveness is the tendency of wasting energy. This can be concluded from the data of energy elasticity ratio which reflect the energy consumed by a nation to reach one percent of Gross Domestic Products (GDP). The energy elasticity ratio of Indonesia reaches 1.85% which is higher then some of the neighboring countries’ that only reach 0.5%-1%. This was discerned significantly recently when Indonesia came into contact with the energy crisis.

The energy crisis experienced lately was initiated due to the bad weather that hampered the supply of the fuel, especially coal, to the power plants which mostly located across the sea from where it was mined and refined. The escalation of the oil price in global market, which touches $100/barrel, made it worse. The base expense of electric supplying soared while the local oil supply was running low because of the producer’s preference of exporting the oil more than selling it for domestic needs.

As the only one electric utility company in Indonesia, PT. PLN (Persero) is greatly troubled by this situation. That’s why, starting from the beginning of April 2008, PLN will apply the “incentive-disincentive” policy that affects the tariff of electricity. Firstly, the average monthly electric usage of the consumers is determined based on the historical data acquired. A consumer will get an incentive in the form of discount if the electric usage of the month is under 80% of national average monthly electric usage. On the other hand, if the electric usage of the month is over 80%, the consumer will get a disincentive in the form of additional charge for the excessive usage.

I believe that there’s a good intention behind this policy. It can educate Indonesian people to be thriftier in using the energy. If the goal is accomplished, government can decrease as much as Rp 18.66 trillion (about USD$ 1.8 billion) per year from its yearly budget. That is a significant number considering the subsidy for electricity that surpass Rp 65 trillion (about USD$ 6.5 billion) this year.

It’s 10 more days to the implementation of this policy. Unfortunately there are still some noticeable flaws. The first one is the socialization of this policy. I believe that most of Indonesian people don’t have any clue yet about this policy and the tariff’s calculation detail. Even for a person such as me who’s connected to the internet, watch television, and read newspaper daily, it still took me some times to get the clear information about this policy. That’s why PLN and government should prioritize the socialization of this program to avoid the sudden resistance of the Indonesian citizens.

The second important thing is about the transparency of the data processing. I’m learning statistics now and I realize that determining the average value of the monthly electric usage isn’t as easy as it seems, especially when dealing with the unevenly distributed data like the national electric usage. The electric usage of people in the less developed area will differ compared to the people in the more developed area, even though both of them are in the same consumer level. This fact will be objectionable to the people in the more developed area, especially in the big cities, because their actual daily energy needs mostly greater than the needs of people in the less developed area.

Nevertheless, I still hope that this policy is really based on the goodwill of the government and the improvement will be constantly maintained during the implementation so that this policy will bring goodness for Indonesia and lead Indonesian people to prosperity.